Excess Roth IRA contribution and form 1099-R

[sjscherf]

Ok, so I posted about this a couple days ago and got a response with instructions, but I didn't give the full details in the original post, and want to make sure I do things correctly. I am just about done with our tax return for TY2024, but found out I had an excess contribution to my IRA's. I thought you could contribute up to $8,000 each to a Traditional IRA and a Roth IRA, but now realize it is $8,000 total between the two IRA's.

So here's the situation. In 2024 I had a Roth IRA with Edward Jones (and still have), and a rollover IRA with Fidelity. I had made a $75 contribution to the Fidelity IRA in January of 2024. On March 4 of 2024, I moved my Fidelity rollover IRA account over to Edward Jones. During 2024, I, with the help of my financial advisor with Edward Jones contributed $8,000 to my Roth IRA. We had both forgotten about the $75 contribution in January of 2024 to my Fidelity IRA, which put me over the $8,000 contribution limit for 2024. So on March 6 of this year, Edward Jones removed $75 from my Roth IRA contributions plus the $4.45 attributable earnings and put it into my wife and my joint mutual fund account with Edward Jones. As for the $75 contribution to my Fidelity IRA in Jan. of 2024, there was an attributable gain of $1.31 before it was moved over to Edward Jones. Since I haven't filed my taxes yet this year, I'd prefer to take care of this excess contribution to my Roth IRA now instead of waiting to receive a 1099-R next year and having to amend this year's return. This was the information I had received a couple days ago:

If you made an excess contribution in 2024 and withdrew the 2024 excess Roth IRA contribution plus earnings in 2025 before the due date, then you will get a 2025 Form 1099-R in 2026 with codes P and J. This 1099-R will have to be included on your 2024 tax return and you have two options:  

• You can wait until you receive the 2025 Form 1099-R in 2026 and amend your 2024 return or
• You can report it now in your 2024 return and ignore the 1099-R when it comes unless there is Box 4 Federal Tax withholding and/or Box 14 State withholding. Then you must enter the 2025 Form 1099-R into the 2025 tax return since the withholdings are reported in the year that the tax was withheld. The 2025 code P will not do anything to your income to the 2025 tax return income but the withholdings will be applied to 2025.

To create a Form 1099-R in your 2024 return please follow the steps below:

1. Login to your TurboTax Account 
2. Click on the "Search" on the top right and type “1099-R” 
3. Click on “Jump to 1099-R”
4. Answer "Yes" to "Did you get a 1099-R in 2024?"
5. Select "I'll type it in myself"
6. Box 1 enter total distribution (contribution plus earning)
7. Box 2a enter the earnings
8. Box 7 enter J and P
9. Click "Continue"
10. On "Is the IRA/SEP/SIMPLE box on this 1099-R checked?" screen answer "No, the box is blank"?
11. On the "Which year on Form 1099-R" screen say that this is a 2025 Form 1099-R.
12. Click "Continue" after all 1099-R are entered and answer all the questions.
13. Continue until "Did you use your IRA to pay for any of these expenses?" screen and enter the amount of earnings under "Corrective distributions made before the due date of the return".

Please be aware, code P will say in the drop-down menu "Return of contribution taxable in 2023" but you can ignore that since the follow-up question will tell TurboTax that it will be taxable in 2024.

After this reply I mentioned about the rollover IRA contribution and attributable gain and was given the extra information:

"You will request the withdrawal of the excess $75 contribution plus the $1.31 plus the gain while it was with Edward Jones. Edward Jones will issue the 2025 Form 1099-R in 2026 to show the whole distribution in Box 1 and the total earnings in Box 2a. If you want to avoid amending your return you can enter a 2025 Form 1099-R now with the steps provided above."

So if I report all of this now on my 2024 return and create a form 1099-R, I have the $75 excess contribution to my Roth IRA with $4.45 in attributable earnings, plus $1.31 in attributable earnings from my Fidelity IRA before it was moved to Edward Jones. Do I put all of that into one Form 1099-R, or do I need to make two separate Form 1099-R's? One for the Roth IRA and one for the Traditional Rollover IRA? Or can I just put them all into one form 1099-R? If all on one form, then for Box 1 total distributions (Contribution plus earning) I would add up the $75 excess contribution plus the $4.45 earnings plus the $1.31 earnings for a total of $80.76. And for Box 2a earnings, I add up $4.45 plus $1.31 for a total of $5.76? And then follow the rest of the steps listed above? Is this all correct? If not, can you please let me know what I do need to do? Sorry for the long post and I really appreciate your help with this!

[DanaB27 · Accepted solution]

No, you do not include the 1.31 gain from the rollover account. You do not need to enter this 1.31 gain anywhere since this was a rollover.

In regards to entering the Form 1099-R for return of excess Roth IRA contribution plus earnings, box 1 is $79.45 ($75 plus $.45 gain) and box 2a is $4.45 (gain from Edward Jones).